VIEWPOINTS

Business EnvironmentBy Christian Spence – Head of Research & PolicyPolicy is hard enough without politics, but politics trumps reality. It’s not ideal, but it’s the way the world works, and those of us who work in this world are long-used to dealing, ultimately, in the same way that business does, with the world as it appears today, and not as we’d like it be. However, that doesn’t mean that we’re not working to try and shape that world, to influence it, and to guide the government and its advisors on how they should go about achieving both their and our ideal objectives.​I’ve long maintained that political parties of all persuasions, government (both national and local), the third sector and the business world have far more in common than any one of those sectors would ever admit. Even when political parties from diverse backgrounds debate issues, if you can get past the often tedious adversarial nature of their debates, they all want broadly the same things, and those are often broadly the things that we want: a successful economy, good housing, vibrant culture, efficient infrastructure, rising prosperity for all, and efficient government. Where the disagreements, often heated, come about, is in the different ways we think that these things are best achieved.

This is, for people like me who earn our living from policy design, the hard part. The nature of politics mean that our political leaders often resort to easy phrases, talking publicly about the parts of policy and legislation that are tangible to the general public, essentially reducing complex issues to short soundbites. When talking about business taxation, all energy is focused on corporation tax (single number, nationally applied) but never about business rates, employer national insurance contributions, energy levies, pension costs or the other myriad ways in which the tax system affects business. Politicians focus on “fair contributions” whilst missing the important ways in which the system incentivises businesses to behave in certain ways.

And even more challenging is the way in which different systems interact, and this is routinely missed by our politicians and even by the civil service. The previous government’s draft industrial strategy is a good example. It mostly correctly identifies some of the structural issues that our economy faces (though, as they’ve been the same ones for forty years, it shouldn’t have been difficult) and presents them as a number of discrete pillars. But it misses the way in which those vertical pillars are inextricably bound together with horizontal ties, and this is both what’s important and what we generally refer to as the overall business environment.

Policy on tax, employment, skills, the environment, planning, transport and the wider legal and compliance framework all interact with each other, weaving a complex web. Too often, individual policies are considered in isolation, without looking to see how other policies will affect their implementation. And far too often, solutions to issues are sought by passing new legislation in the same area, when easier solutions can be found by repealing legislation from a different one, the issue being not any on piece of policy, but the horizontal ties where they interact.

For me, this is where the policy world is its most interesting. The realisation that a piece of legislation that deals with commercial tenancy agreements may be causing some of the problems that appear in a different area, such as the revaluation of premises for business rates, is a huge eye-opener. It doesn’t mean that solving the problem is any easier, but it does mean the solution may well not be where government is looking for it.

That’s why we’ve called for government to reassess the way it looks at legislation and regulation. Everything must be considered in the round, so policies, laws, and individual government departments stop working in isolation, and instead try to see the world from someone else’s point of view. As so often, the solution lies in recognising what the best of businesses do already. It’s about developing a mature pragmatism, understanding that one person doesn’t know everything, and devolving decision making to those are best placed to respond. As someone once said, collaboration is the new competition; the best businesses have already learnt this. Our challenge is to get government onto the same page.